Item 1.01. Entry Into a Material Definitive Agreement. On November 14, 2022, Charlotte's Web Holdings, Inc. (the "Company"), entered into a subscription agreement with BT DE Investments Inc. ("BAT"), a wholly owned subsidiary of British American Tobacco p. l. c., providing for the issuance of a convertible debenture held by BAT in the principal amount of C$75,341,080 (US$54 million) (the "Convertible Debenture"). The Convertible Debenture accrues interest at a stated annualized rate of 5% until such time that there is federal regulation permitting the use of cannabidiol ("CBD"), a phytocannabinoid derived from the plant Cannabis sativa L. as an ingredient in food products and dietary supplements in the United States. Following federal regulation of CBD, the stated annualized rate of interest shall reduce to 1.5%. The maturity date for the Convertible Debenture is November 14, 2029 (the "Maturity Date"). The principal amount of the Convertible Debenture is currently convertible at the option of the holder into common shares of the Company ("Common Shares") at any time prior to the close of business on the business day prior to the Maturity Date, at a conversion price of C$2.00 per Common Share, subject to customary anti-dilution adjustments (the “ Conversion Price”). Accrued and unpaid interest is currently convertible into Common Shares at a price equal to the five-day volume-weighted average price of the Common Shares on the Toronto Stock Exchange (the “ TSX”) as of the trading day prior to the date of the applicable conversion notice (“ Interest Conversion Price”). Pursuant to the Convertible Debenture, unless the Company has obtained shareholder approval, BAT shall not convert the Convertible Debenture, in whole or in part, if and to the extent that, as a result of such conversion, BAT would beneficially own or exercise control or direction over, in excess of 19.9% of the number of Common Shares outstanding immediately after giving effect to such conversion (such limit, the “ Conversion Cap”). Subscription Agreement On March 30, 2026, the Company and BAT entered into a subscription agreement (the “ Subscription Agreement”) which provides for the purchase and sale of that number of Common Shares (the "Investment") that is equal to the quotient of US$10,000,000 (approximately C$13.9 million at current exchange rates), as converted into Canadian Dollars, divided by the greater of: (i) C$0.94 per share, and (ii) a dollar amount equal to the maximum discount available pursuant to section 607 of the TSX Company Manual applied to the 5-day volume weighted average price of the Common Shares on the TSX for the five consecutive trading days ending on and including the business day immediately preceding the closing date of the Investment. The maximum number of Common Shares to be issued to BAT under the Investment is 14,760,638 Common Shares. The Investment provides important additional capital at a critical stage in the Company’s development The Investment is expected to close on or around May 28, 2026 (the “ Closing”). The Investment together with the conversion of the Convertible Debenture (as defined below), will result in the issuance of approximately 110 million Common Shares to BAT and represents a total equity commitment from BAT of approximately C$103 million (approximately US$75 million). Convertible Debenture Amendment In connection with and concurrently with the Closing, the Company and BAT will enter into an amendment and conversion notice (the “ Amendment and Conversion Notice”) to amend the terms of the Convertible Debenture to: (i) amend the Conversion Price from C$2.00 to C$0.94 per share; (ii) amend the Interest Conversion Price to C$0.94 per share; and (iii) increase the applicable threshold for purposes of the Conversion Cap from 19.9% to 40.8% (collectively, the “ Amendment”). The effect of the Amendment is that the Convertible Debenture is convertible into 95,281,277 Common Shares, which is equal to 68.9% of the Company’s 159,683,953 Common Shares currently outstanding as of the date hereof and approximately 40.8% of the Common Shares (calculated on a non-diluted basis) based on 269,725,868 Common Shares expected to be issued and outstanding on completion of the Investment and conversion of the Convertible Debenture. A form of the Amendment and Conversion Notice is filed herewith as Schedule D to the Subscription Agreement filed herewith as Exhibit 10.1. Convertible Debenture Conversion Immediately following the effectiveness of the Amendment, BAT will convert the principal amount of, and all accrued but unpaid interest on, the Convertible Debenture into 95,281,277 Common Shares. Amended and Restated Investor Rights Agreement In connection with the issuance of the Convertible Debenture on November 14, 2022, BAT and the Company entered into an investor rights agreement dated November 14, 2022, which, effective upon completion of the Transaction, they have agreed to amend and restate to provide, among other things, (a) that BAT will have the right to nominate directors in line with its pro rata equity ownership (provided BAT will in any case have the right to nominate at least two directors) for so long as they hold at least 10% of the Company's equity, (b) for certain restrictions on equity issuances and indebtedness, and (c) for certain changes to BAT's existing customary top-up rights. The following summary of the investor rights agreement after giving effect to such amendments (the “ Amended & Restated IRA") agreed to by the parties in connection with the execution of the Subscription Agreement does not purport to be a complete description of all the parties’ rights and obligations thereunder and is qualified in its entirety by reference to the complete text of the Amended & Restated IRA when entered into, a form of which is filed herewith as Schedule C to the Subscription Agreement filed herewith as Exhibit 10.1. Nomination Rights Pursuant to the Amended & Restated IRA, BAT will be entitled to designate a certain number of nominees to be elected to the board of directors of the Company (the "Board") in proportion to BAT’s partially diluted ownership percentage, provided that BAT will not at any time be entitled to fewer than two nominees as long as it continues to beneficially own at least 10% of the Common Shares on a partially diluted basis. BAT will be entitled, subject to the terms and conditions of its nomination rights, to replace its nominee directors from time to time. If BAT’s Common Share ownership level declines below the threshold required to maintain the number of seats it holds, BAT will be afforded a cure period to acquire additional securities to restore the required ownership percentage. The Board nomination rights, including the right to a minimum of two nominees, terminate if BAT’s partially diluted ownership percentage falls below 10%. Demand & Piggyback Registration Rights